Tuesday turned out to be a nightmare for shareholders of drug maker Sarepta Therapeutics Inc (NASDAQ:SRPT) and surgical robot maker Transenterix Inc (NYSEMKT:TRXC), as the stock prices tumbled sharply in the wake of FDA concerns. Brokerage firms Cowen and BTIG chimed in on the news.
Sarepta Therapeutics Inc
Sarepta caused some serious pain to investors today as the stock price tumbled nearly 45%, after the FDA released new and negative briefing documents ahead of Monday’s AdComm for Sarepta’s eteplirsen in Duchenne muscular dystrophy (DMD).
Cowen analyst Ritu Baral was the first to comment: “Overall tone of the FDA briefing documents was similar to those released earlier this year: very critical, very unconvinced. FDA criticizes multiple aspects of SRPT’s NDA, disagreeing in principle on methodology, data integrity and various technical aspects. Further, FDA rebukes SRPT’s response to their earlier briefing documents, alleging “key inaccuracies” within their arguments, instead asserting that SRPT’s application has been inaccurate and inconsistent. Unsurprisingly, many members of the upcoming eteplirsen AdComm also served on last year’s AdComm for BMRN’s drisapersen for DMD. Given the negative result of the BMRN AdComm, this substantial overlap may further set the stage for this crucial step in eteplirsen’s regulatory process.” The analyst concluded, “All of this bodes very poorly for this coming Monday’s panel.”
Baral reiterated a Market Perform rating on shares of Sarepta, while no price target was provided.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ritu Baral has a yearly average return of 6% and a 40% success rate. Baral has a -20% average return when recommending SRPT, and is ranked #526 out of 3907 analysts.
Out of the 15 analysts polled by TipRanks, 7 rate Sarepta stock a Buy, 7 rate the stock a Hold and 1 recommends a Sell. With a return potential of 227%, the stock’s consensus target price stands at $35.27.
Transenterix shares lost over 50% of their value today after the FDA rejected the company’s 510(k) submission for its SurgiBot System, a robotically enhanced laparoscopic surgical platform that allows the surgeon to be patient-side within the sterile field. The FDA determined that SurgiBot was not substantially equivalent to a predicate device.
In reaction, BTIG analyst Sean Lavin reiterated a Neutral rating on the stock, with a $6.00 price target, which implies an upside of 178% from current levels.
Lavin commented, “Not substantially equivalent” is essentially a way the FDA says no. While we are not FDA terminology experts, it does not tell us much about the issue and we believe could mean anything from the predicate wasn’t acceptable, to you need more data, to the device isn’t safe, to your manufacturing needs change, to really anything. Mgmt had previously discussed their submission and felt they had crossed all Ts and dotted all Is in terms of making sure the agency was comfortable with the predicate and the data they planned to submit. We always wondered about the need for human data but per mgmt the FDA did not seem to require it.”
“We do not know the issue so it’s hard to know what the plan may be. We think the plan could be anything from a simple fix, to a need to submit more data, to needing to prove some kind of safety or proper handling of the device,” the analyst concluded.
According to TipRanks.com, analyst Sean Lavin has a yearly average return of 5% and a 62% success rate. Lavin has a 71% average return when recommending TRXC, and is ranked #529 out of 3907 analysts.
Don’t be late to the party – Click Here to see what 4500 Wall Street Analysts say about your stocks.